For more information about Vanguard funds, visit vanguard.com or call 877-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss.

Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. Stocks of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.

All investing is subject to risk, including the possible loss of the money you invest.

From cooking the Thanksgiving turkey to writing down your New Year’s resolutions, the end of the year is undoubtedly a hectic time. If you’re like me, you might be tempted to procrastinate, especially when it comes to long-term things, like 529 college savings plans. But year-end actually presents the opportune time to take just a few moments to set yourself up well. Below are some quick tips and reminders to keep you on track to meet your education savings goals.

Take advantage of any state tax benefits: Many states offer tax deductions for contributions made to a 529 plan account. If you have to pay state tax, be sure to research in which plans you can invest to take that deduction, and the amount of the deduction for the year. For more information, check out our state tax deduction calculator.

Make it a family affair: Anyone can contribute to a 529 plan, so if family or friends plan to give cash to your child for a birthday or holiday, consider having them deposit the funds into your child’s 529 account instead. Plus, each child can have multiple accounts set up for his or her benefit, so your friends or family could open separate accounts for your child in their own names and take advantage of any tax benefits themselves.

Strategize your drawdown: If you’re currently paying for college, take a look at Vanguard’s research for an efficient drawdown strategy. How you use your assets earmarked for college can affect your child’s financial aid eligibility and may also present various tax benefits or consequences. Additionally, don’t forget about the continued benefits you may receive for continuing to invest in your 529 plan while your child is attending college.

Keep your portfolio balanced: If you’re not using an age-based investment option in your 529 account, the end of the year is a great time to rebalance your portfolio to maintain your desired asset allocation. Keep in mind that you can perform two exchanges in your 529 account per calendar year. Also remember that if you exchange into new funds in your portfolio, you may need to update your contribution allocations to match your new portfolio allocation.

Maximize the annual gifting exclusion: Contributions to a 529 account are considered gifts and are subject to the gift tax rules; however, in 2016, individual contributions up to $14,000 per beneficiary (student) are exempt. This amount doubles to $28,000 per beneficiary for married couples filing jointly. Investors also have the ability to front-load their contributions to 529 accounts with five years’ worth of the gift tax exclusion amount. This means that individuals can contribute up to $70,000 and married couples can contribute up to $140,000 in one year and still take advantage of the exclusion as long as they don’t provide another gift to the beneficiary in the following five-year period.

Make sure to stay on top of contribution deadlines to fully take advantage of all the benefits available to you. In most cases, contribution checks must be postmarked by the last calendar day of the year, and online contributions, including automatic investment plan debits, should be processed on or before the last business day of the year. (Some states extend these deadlines, so follow the dates in your 529 plan’s disclosure booklet.) Finally, make sure to keep track of bills and receipts that show your withdrawals were used for qualified education expenses. A few moments of your time now can make a meaningful difference in meeting your education goals.

I’d like to thank Jenna McNamee of Vanguard Investment Strategy Group for her contributions to this blog.

Charu Chander Gross

Charu Gross is head of Vanguard's Education Savings Group, responsible for providing 529 education savings offerings to state and retail clients. She joined Vanguard in 2005 and has worked in several roles spanning human resources, Vanguard Advice Services Group, and Vanguard Retail Services where she was head of Voyager Select®, overseeing 200 employees serving clients with assets ranging from $500,000 to $1 million. Charu earned a B.S. in economics from Penn State. She holds FINRA Series 6, 7, 24, 26, and 51 licenses.

Comments

James D. | May 22, 2017 3:23 pm

A friend has a Vanguard 529 and using Ugif529 to setup events like birthdays so friends and family can go to Ugift529 and contribute, but it is through SSgA 529, a service provider. Does Vanguard allow contribution through Ugift 529 without going through SSgA 529?

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For more information about Vanguard funds, visit vanguard.com or call 877-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss.

Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. Stocks of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.

All investing is subject to risk, including the possible loss of the money you invest.